Punjab National Bank (International) Ltd v Ravi Srinivasan
| Jurisdiction | England & Wales |
| Judge | Sir Geoffrey Vos |
| Judgment Date | 17 December 2019 |
| Neutral Citation | [2019] EWHC 3495 (Ch) |
| Date | 17 December 2019 |
| Docket Number | Claim No: HC-2017-001895 |
| Court | Chancery Division |
[2019] EWHC 3495 (Ch)
Sir Geoffrey Vos, Chancellor of the High Court
Claim No: HC-2017-001895
IN THE HIGH COURT OF JUSTICE
IN THE BUSINESS AND PROPERTY COURTS
BUSINESS LIST (CHD)
On appeal from Chief Master Marsh
Rolls Building, 7 Fetter Lane
London, EC4A 1NL
Mr Philip Hackett QC and Mr Lee Schama (instructed by Gunner Cooke LLP) for Punjab National (International) Bank
Mr Nicholas Vineall QC and Mr Brian Dye (instructed by Zaiwalla & Co) for the first, second, and fourth to ninth defendants
Mr Matthew Morrison (instructed by RHJ Devonshire Solicitors) for the third defendant, Mr Narasimhan Ramkhumar
Hearing dates: 5 th and 6 th December 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Sir Geoffrey Vos, Chancellor of the High Court
Sir Geoffrey Vos, Chancellor of the High Court:
Introduction
The claimant, Punjab National Bank (International) Limited (“PNB”), a bank based in London seeks permission to appeal against the order of Chief Master Marsh (the “Chief Master”) dated 22 nd February 2019, but date stamped by the court on 1 st March 2019. By that order, the Chief Master set aside an order he had made on 13 th September 2017 granting permission to PNB to serve these proceedings out of the jurisdiction by email, and a further ancillary order made by Deputy Master Bartlett (the “Deputy Master”) on 9 th February 2018 granting permission to serve the first defendant out of the jurisdiction by email, and extending the period for service of the proceedings on all defendants. The Chief Master also set aside both the claim form and service of the claim form on all the defendants.
Two High Court judges considered the application for permission to appeal. Neither granted permission, but on 24 th July 2019, Barling J ordered a two-day hearing of the application with the substantive hearing of the appeal to follow, if permission was granted.
The case concerns a series of three loan transactions made by PNB to corporate borrowers and allegedly guaranteed, in broad terms, by the defendants (except the first defendant). The three loan transactions have been referred to, for convenience, as the “SEPL loans”, the “Pesco loans”, and the “Trishe loans”. The loans were made between 29 th March 2011 and 1 st December 2014, and totalled some US$45 million. They were made for the purposes of oil re-refining and wind energy generating projects in the USA. The third to ninth defendants are all allegedly guarantors domiciled either in India or the USA. The borrowers themselves, with the exception of the fifth defendant (“Pesco USA”) and the second defendant (Trishe Resources Inc (USA)), are not party to the proceedings because they are insolvent.
In the broadest outline, the Chief Master set aside the permission that had been granted to serve the proceedings out of the jurisdiction on the grounds that (i) PNB had been guilty of material non-disclosure, in that it failed properly to inform the court about two sets of proceedings that it brought in South Carolina, USA (the “US proceedings”) and in Chennai, India (the “Chennai proceedings”), (ii) PNB had not shown that it had a serious case to be tried in respect of its claims for fraudulent misrepresentation and deceit, (iii) PNB had failed to demonstrate that England was clearly the most appropriate forum for their claims, (iv) PNB had failed to comply with the 13 th September 2017 order because it served amended claim forms and particulars of claim without court approval, (v) no good reason based on exceptional circumstances had been provided justifying the order for service by email, (vi) the Deputy Master ought not to have granted an extension of time for service, (vii) service was, in any event, effective on 13 th February 2018, which was one day outside the extended period allowed by the Deputy Master's order, and relief was not warranted, and (viii) PNB had in any event failed to show that it had a reasonable prospect of success on its contractual claims against the third defendant.
Mr Philip Hackett QC, leading counsel for PNB, has challenged every aspect of the Chief Master's decision. He concentrated on his submissions that:-
i) The Chief Master had failed to accord adequate weight to the exclusive English jurisdiction clauses and waivers in the loan agreements, which also included internal guarantees, and the English jurisdiction clauses in the guarantees. Those clauses should have been a weighty factor in favour of English jurisdiction.
ii) The Chief Master had wrongly evaluated the pleaded claims in fraudulent misrepresentation and deceit. Had he properly understood those claims, he would have seen that PNB did indeed have a strongly arguable claim. No repayment of any of the loans had ever been made, and the defendants had authorised a Mr Dheeraj Jain (“Mr Jain”) to make repeated fraudulent misrepresentations to secure the loans.
iii) A combination of the exclusive jurisdiction clauses and the strongly arguable claims in fraud pointed towards the need to try the whole matter in one jurisdiction. England was the only possible jurisdiction. The omission to disclose the US proceedings and the Chennai proceedings caused the defendants no prejudice as they knew from the loan documentation that PNB was at liberty to bring parallel enforcement proceedings in different jurisdictions. The Chief Master ought to have placed strong reliance on articles 3 and 5 of the Hague Convention on Choice of Court Agreements (the “Hague Convention”), and article 25 of The Recast Brussels Regulation (“Brussels Recast”), which obliged the court to accept jurisdiction where there were such exclusive jurisdiction clauses.
iv) Whilst the Hague Convention and Brussels Recast did not abrogate the Chief Master's discretion to set aside an order for service out on the grounds of material non-disclosure, they ought to have weighed heavily in the balance, when he was exercising his discretion in relation to the set-aside application. The Chief Master had made three significant errors as to the jurisdiction clauses, the fraud claim, and England being the most appropriate forum. Those errors explained why he had also reached the wrong conclusion on the non-disclosure issue.
v) In any event, the Chief Master ought to have allowed the claims in relation to the Pesco loans to proceed, since they are not the subject of any foreign proceedings.
vi) The Chief Master ought not to have set aside the order for an extension of time for service of the claim form, as there was no prejudice to the defendants in making that order.
vii) The Chief Master was wrong to decide that PNB needed a revised permission to serve the amended court documents. The Deputy Master's order approved those documents as was acknowledged at [106] in the Chief Master's judgment.
viii) Although the service was technically defective, there was no prejudice to the defendants, and relief ought to have been granted to PNB to cure the delay in service of one day.
ix) There were indeed appropriate grounds for the order allowing service by email in law and on the evidence.
Mr Hackett expressly agreed with this formulation in the course of his oral reply submissions.
Mr Nicholas Vineall QC, leading counsel for all defendants apart from the third defendant, submitted that the Chief Master had been right on all counts. He pointed out that, even if PNB succeeded in its arguments on jurisdiction, fraud, forum and nondisclosure, it still had to show that the Chief Master was wrong about each of (a) the Deputy Master's order not having approved the amended pleadings (save in respect of the first defendant), (b) email service having been unjustified, (c) the invalidity of the extension of time for service of the proceedings, and (d) the actual email service having only been effective after the extended deadline.
Mr Matthew Morrison, counsel for the third defendant, argued that the Master had been right to say that the only guarantee that PNB relied upon in its pleading against his client was that dated 7 th April 2012, and that guarantee was subject to a Chennai jurisdiction clause, and did not cover the Trishe or any other pleaded loan. There was, he submitted, no properly pleaded contractual claim against the third defendant. Moreover, email service was particularly unmeritorious in the case of the third defendant, when he had never even been asked by PNB for his address.
The first question that I need to answer relates, of course, to permission to appeal. The applicable test is whether PNB has shown that there is a real prospect of success or some other reason why an appeal should be heard. The parties submitted that I should go through each ground of appeal in turn and answer those questions in relation to each. There is something quite unrealistic about adopting that course after hearing 1 1/2 days' argument on the substantive issues, and having already confined the central issues in dispute to a manageable list. After due consideration, and for reasons that appear in the substantive sections of this judgment, I have formed the clear view that PNB made an adequate case for permission, on one or other of the tests I have adumbrated, in respect of all the arguments I have summarised at [5] above. I do not intend to go through the 24 discursive grounds of appeal enumerated in PNB's appellants' notice. In the interests of...
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